As follow-on to our last blog, “DSTs and Immigration,” liberals say they want ‘livable’ cities, but their policies arguably produce high taxes, crime and chaos.
In case you missed it while watching, “It’s a Wonderful Life” this holiday season, a sleeping woman was burned to death on the New York subway, while the man who lit her on fire, a 32 year old undocumented immigrant from Guatemala, fanned the flames.
I guess Manhattan District Attorney Alvin Bragg and his minions were too busy prosecuting ex-marine Daniel Penny for protecting fellow subway riders from a mentally ill drug addict threatening to kill them, to notice. Sadly, most libs will likely miss the irony here.
Although extreme, this may be illustrative of many progressively governed cities perceived problems: crime, mentally deranged and intoxicated vagrants, undocumented migrants and unsafe public transportation.
In our hometown, Max Light Rail Service does a great job moving the bad guys around quickly and efficiently. Wherever it goes they can go, taking crime and predation with them.
Residents of most progressively governed cities presumably know you take public transportation at your own risk. This is particularly true of seniors. Due to their age and perceived frailty, they are a favorite target of thieves, the mentally ill and drug addicted.
However, liberals appear to ignore this reality and blame public fright on supposedly distorted perceptions of these ‘unfortunates.’
I believe this is now endemic in big democrat controlled cities like New York, Chicago, Los Angles, San Francisco, Portland, Seattle, Denver, the Twin Cities, etc. This being the case, the public then presumably considers doing the logical thing, protecting themselves by using other modes of transportation like Uber.
As a result, ridership plummets and public transportation bleeds red ink. I believe this is exacerbated by the generous union contracts negotiated with rent-seeking democratic politicians running things, thus, adding to state and local deficits.
These same politicians then may raise taxes on what remains of the private sector.
High taxes, crime and chaos have become unbearable for many. It is no surprise then that blue state cities continue to lose population. This may be partially offset by migrants from south of the border. However, with a change in administration imminent, this may be temporary at best. In the interim, adding insult to injury, these migrants may receive better public amenities than tax paying natives.
Therefore, blue state CRE owners have the potential be trapped in a vicious downward spiral of deteriorating quality of life, increasing crime, higher taxes and less business.
What’s an investor to do? Considering a 1031 exchange using DST properties to ‘get red’ comes to mind. If blue state cities continue turning left, there is no reason to drive off the cliff with them.
Your instincts and everything you see day in, day out are telling you it’s past time for a change. This is easily done with the steadily expanding national ownership and management footprint of DST properties.
With new property inventory constantly being added to independent broker-dealers’ available inventory, you can literally take your equity anywhere.
Corporate sponsors of these property programs are always pushing the envelope in terms of property type and location. To be successful, it is imperative they strive to anticipate changing institutional investment trends and try to place investors in front of them.
In the last quarter century, our economic drivers have changed profoundly. With AI becoming the determinative information gatekeeper, this may likely accelerate, bringing further change to what people do and where they do it from.
Due to this, we believe flexibility and diversification will be critical to future CRE investment success. Just plodding along doing the same old thing while everything is changing around you may no longer work.
The fractional nature of DST ownership allows you to diversify both functionally and geographically, thus bringing something like modern portfolio theory (MPT) to ownership.
MPT uses a mathematical framework to build a portfolio of investments that seek to maximize the amount of expected return for the collective given level of risk.
The key component of MPT theory is diversification. Heretofore, adequate diversification among different CRE types has been difficult for all but the biggest CRE investors.
With the fractional nature of DST ownership this is easily accomplished both functionally and geographically. Additionally, this may also provide greater liquidity with different property types going full cycle (selling) at different intervals.
